PowerShares DB Precious Metals Fund Getting Very Oversold

In trading on Friday, shares of the PowerShares DB Precious Metals Fund ETF entered into oversold territory, changing hands as low as $37.71 per share. We define oversold territory using the Relative Strength Index, or RSI, which is a technical analysis indicator used to measure momentum on a scale of zero to 100.

In trading on Friday, shares of the PowerShares DB Precious Metals Fund ETF ( DBP) entered into oversold territory, changing hands as low as $37.71 per share. We define oversold territory using the Relative Strength Index, or RSI, which is a technical analysis indicator used to measure momentum on a scale of zero to 100. A stock is considered to be oversold if the RSI reading falls below 30.

In the case of PowerShares DB Precious Metals Fund, the RSI reading has hit 27.9 — by comparison, the RSI reading for the S&P 500 is currently 55.9.

A bullish investor could look at DBP's 27.9 reading as a sign that the recent heavy selling is in the process of exhausting itself, and begin to look for entry point opportunities on the buy side.

Looking at a chart of one year performance (below), DBP's low point in its 52 week range is $31.93 per share, with $42.74 as the 52 week high point — that compares with a last trade of $37.80. PowerShares DB Precious Metals Fund shares are currently trading down about 2.4% on the day.